Our Events

Follow us

Account

Should agencies assume all IP liability?

Sir Martin Sorrell raised the thorny issue of intellectual property in a piece he wrote last week for the launch of Campaign US. He said it was disturbing that agencies are forced to "assume unlimited intellectual property liability. In essence, we are being asked to underwrite uninsurable risk. Just as we are not banks, we are not insurance companies either."

Sorrell highlights a growing risk for agencies, whether it is from something generated with the agency, assets supplied by a client or, as is increasingly the case, work from creative and other third-party specialists commissioned by the agency itself. All carry some risk of intellectual property infringement – why should an agency bear all of that risk? Especially if it is uninsurable because the client has insisted on unlimited liability.

This trend can only have a negative effect on creativity. If clients load agencies with unlimited intellectual property risk, then all they are going to come up with are very boring, safe solutions. If clients want work that is creative and unusual that captures the zeitgeist, then, sometimes, they will have to take a chance.

Trade body

Paul Bainsfair, director-general, IPA

"Sir Martin Sorrell has put his finger on a big issue here. Simply demanding that agencies assume unlimited liability is completely unreasonable and hardly conducive to a balanced working relationship. Agencies are too often caught in the middle. Of course, agencies must ensure that they have all necessary rights entitling them to use third-party IP for the purposes intended by their clients. The difficulty is marrying up the client’s requirements with precisely what it is that the third party is willing to transfer. It would make life a lot easier if clients appreciated how difficult it can be for agencies to obtain unfettered rights."

Lawyer

Brinsley Dresden, head of advertising and marketing, Lewis Silkin

"Agencies should not accept liability for IP supplied by clients, such as work created by the client or through another agency, which should be excluded from any warranties and indemnities. When an agency commissions work from a third party, it should obtain warranties and indemnities from the creator and oblige the creator to maintain insurance cover. Any limit on liability agreed with the creator must match the limit agreed with the client. If the client wants a risky execution, such as a parody, the agency should also negotiate a release from liability for any disclosed risks."

Trade body

"The MAA Super Entrepreneurs report highlighted that clients and agencies need to be braver in areas such as IP and more innovative to build greater opportunity for the future. This trend of clients pushing back on agencies to hold all the risk on IP developed from third parties is going to prevent these opportunities. If an agency is using third-party material to create new IP, they need a contract/agreement that talks about transparency of what they are doing and holds both client and agency liable. At the end of the day, the agency is doing this to help grow their client’s business and should not be held fully responsible for the risk."

Lawyer

Robert Lands, partner, HowardKennedyFsi

"You should not assume liability over anything which is not in your control. Contracts are crucial. Ensure you have a contract with every supplier of IP, which grants you all the rights you need – including the ability to pass those rights on to your client. Remember that paying for work does not mean you own the IP. Freelancers will own the IP in any commissioned work unless there is a written agreement transferring it to you. You should additionally ask for appropriate warranties and an indemnity, in case there are claims that the IP is infringing. Your contract with your client should also be scrutinised. Are they asking for more than they need?"

Topics

Join a growing community of media, marketing and advertising professionals today